Why does California produce food

 Why does California produce food and not computers?

Who makes that decision?

Economic System

? An Economic System is the method used by a society to produce and distribute goods and services.

? Every society must answer three questions:

? What goods and services should be produced? ? How should these goods and services be

produced? ? Who consumes these goods and services?

? Societies answer the three economic questions based on their values and goals.

How do societies answer these questions?

They have Economic Goals

Economic Efficiencies-making the most of resources Economic Freedom-freedom from government in

production and distribution Economic Security and Predictability-assurance that

good and services will be available, payments will be made, a safety net will assist in case od disaster Economic Equity-fair distribution of wealth Economic Growth and Innovation-innovation leads to growth, growth leads to higher standard of living

4 Types of economies

Choices

Customs

Consumers and Producers

Government

Consumers, producers, and

government

Traditional

Free Market

Command

Mixed Economy

Traditional Economies

Features: - existence was primarily based on traditions and customs - barter was the main form of trading - individuals existed on a subsistence level - the decision of what, how and for whom was determined by customs and traditions - resources were owned or controlled by a sovereign or feudal lord.

Examples of this economic system: - Remote tribal areas in South America, Africa and Asia

Advantages and Disadvantages?

Traditional Economy

Advantages: 1. Every member of the society knows exactly what they are to do. 2. There is a strong social network. 3. Positions within society are already established. 4. Basic Economic questions are already answered by traditions and customs. 5. Life is generally stable, predictable and continuous.

Disadvantages: 1. This type of society is often very slow to change. 2. It does not take advantage of technological change. 3. There is relatively little promotion of intellectual and scientific development. 4. There is inefficient provision of goods and services. 5. There is inadequate use of skill in relation to the factors of production. 6. No upward movement of labor takes place.

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